Bush admin retroactively drops 100 pollution cases by power plants / States sue

Regulation Begins at Home
By ELIOT SPITZER

Published: November 17, 2003


http://nytimes.com/2003/11/17/opinion/17SPIT.html







LBANY — With two decisions in the last two weeks, the Bush
administration has sent its clearest message yet that it values
corporate interests over the interests of average Americans. In the
Securities and Exchange Commission's settlement with Putnam
Investments, the public comes away short-changed. In the Environmental
Protection Agency's decision to forgo enforcement of the Clean Air
Act, the public comes away completely empty-handed.

The 95 million Americans who invest in mutual funds paid more than $70
billion in fees in 2002. These fees went to an industry that did not
take seriously its responsibility to safeguard investors' money.
Investors are now rightly concerned about whether those mutual funds
that breached their fiduciary duties will be required to refund the
exorbitant fees they took, and what mechanism will be put in place to
ensure that the fees charged in the future are fair.

Unfortunately, the S.E.C.'s deal with Putnam does not provide a
satisfactory answer to these questions. Instead, it raises new
questions.

The commission's first failure is one of oversight. The mutual fund
investigation began when an informant approached our office with
evidence of illegal trading practices. Tipsters also approached the
commission, which is supposed to be the nation's primary securities
markets regulator, but the commission simply did not act on the
information.

The commission's second failure was acting in haste to settle with
Putnam even though the investigation is barely 10 weeks old and is
yielding new and important information each day. Whether the
commission recognizes it or not, the first settlement in a complex
investigation always sets the tone for what follows. In this case, the
bar is set too low.

The Putnam agreement does contain a useful provision mandating that
the funds' board of directors be more independent of the management
companies that run its day-to-day operations. It also talks of fines
and restitution, but leaves for another day the determination of the
amount Putnam should pay.

Most important, the agreement does not address the manner in which the
fees charged to investors are calculated. Nor does it require the fund
to inform investors exactly how much they are being charged — or even
provide a structure that will create market pressure to reduce those
fees. Finally, there is no discussion of civil or criminal sanctions
for the managers who acted improperly by engaging in or permitting
market timing and late trading.

S.E.C. officials are now saying that they may be interested in
additional reforms. But by settling so quickly, they have lost
leverage in obtaining further measures to protect investors. After
reviewing this agreement, I can say with certainty that any resolution
with my office will require concessions from the industry that go far
beyond what the commission obtained from Putnam.

It is not surprising that the commission would sanction a deal that
ignores consumers and is unsatisfactory to state regulators. Just look
at the Bush administration's decision to abandon pending enforcement
actions and investigations of Clear Air Act violations.

Even supporters of the Bush administration's environmental policy were
stunned when the E.P.A. announced that it was closing pending
investigations into more than 100 power plants and factories for
violating the Clean Air Act — and dropping 13 cases in which it had
already made a determination that the law had been violated.

Regulators may disagree about what our environmental laws should look
like. But we should all be able to agree that companies that violated
then-existing pollution laws should be punished.

Those environmental laws were enacted to protect a public that was
concerned about its health and safety. By letting companies that
violated the Clean Air Act off the hook, the Environmental Protection
Agency has effectively issued an industry-wide pardon. This will only
embolden polluters to continue practices that harm the environment.

My office had worked with the agency to investigate polluters, and
will continue to do so when possible. But today a bipartisan coalition
of 14 state attorneys general will sue the agency to halt the
implementation of weaker standards. In addition, we will continue to
press the lawsuits that have been filed. We have also requested the
E.P.A. records for the cases that have been dropped, and will file
lawsuits if they are warranted by the facts.

Similarly, my office — while committed to working with the Securities
and Exchange Commission in our investigation of the mutual fund
industry — will not be party to settlements that fail to protect the
interests of investors and let the industry off with little more than
a slap on the wrist.

The public expects and deserves the protection that effective
government oversight provides. Until the Bush administration shows it
is willing to do the job, however, it appears the public will have to
rely on state regulators and lawmakers to protect its interests.


Eliot Spitzer is attorney general of New York.







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14 states ask courts to block EPA rule


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By Devlin Barrett

http://www.salon.com/tech/wire/2003/...ule/index.html


Nov. 17, 2003 | WASHINGTON (AP) -- More than a dozen state attorneys
general Monday sought to block the federal government from
implementing a rule change they argued would lead to more air
pollution from the nation's power plants.

Fourteen states and a number of cities, including New York, San
Francisco, and Washington, D.C., are seeking a court injunction to
short-circuit a measure by the Environmental Protection Agency before
it goes in effect Dec. 26.




They want to block EPA's loosening of Clean Air Act regulations that
would allow older power plants, refineries, and factories to modernize
without having to install expensive pollution controls.

"If these rules go into effect even temporarily," said New York state
Attorney General Eliot Spitzer, "utilities will get the green light to
spew forth pollution and violate the clear meaning of a statute that
has for decades protected the quality of the air that we breathe."







Today's Daypass sponsored by PBS's "Oklahoma"







To win an injunction, the states must show they are likely to succeed
at a full trial of the issues, and that irreparable harm would be done
if the rule change was enacted even for a short period of time.

"Once they begin the pollution, you can never capture that again,"
Spitzer argued.

The suit was filed in the U.S. Court of Appeals in Washington, D.C.,
by the following states: New York, California, Connecticut, Illinois,
Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New Mexico,
Pennsylvania, Rhode Island, Vermont, and Wisconsin.

The states had filed suit against the EPA last month, but are now
seeking a quick court intervention to block the rule change before it
can take effect.

A spokesman for the Electric Reliability Coordinating Council, a
Washington-based group that represents six power-generating companies,
predicted the effort would fail.

"This is just another attempt by the attorney general to delay reforms
that will improve efficiency and reduce emissions," said the
spokesman, Frank Maisano.

EPA spokeswoman Cynthia Bergman said the agency had not yet seen
Monday's filing, but accused Spitzer of "making charges without having
facts